for everything to become more like
After reading the assigned articles, I realized that nowadays a lot of changes occur because of companies’ tendency to globalize. Growing opportunities of e-business and other Internet activities allow companies to focus not only on domestic or national markets, but also on diverse global markets. That is why the process of globalization requires detailed research and analysis.
Theodore Levitt, the author of the first article “The globalization of markets”, tries to perform that research and analysis showing how the modernity practice influences most countries and how sophisticated new technologies affect further development of the global marketing. He also explains the term – standardization, which is based on standardization of products, manufacturing, and the institutions and commerce, and which is certainly inevitable for succeeding in global competition. His analysis of the Model T leads to understanding of the relationships between competitive producers’ lower global costs and increased quality and reliability which allow them to enter distant markets, and increased customers’ preferences in these markets. In addition, he identifies the effect of Hedgehog, where he states that “The fox knows a lot about great many things, but the hedgehog knows everything about one great thing”, and the author makes the distinction among the multinational corporation that “knows a lot about a great many countries” and the global corporation that “knows everything about one great thing”.
In conclusion, he notices that these days “two vectors shape the world – technology and globalization” and with their help, most companies will offer more or less standardized products of high quality and at optimally low prices.
In the second article, “Global Strategy…In a World or Nations?” the author, George S. Yip provides us with the model which explains the total global strategy and its three essential steps, and shows us the framework of Global Strategy Forces. He also examines the relationships between basic Globalization dimensions and Global Strategy Levers, and gives us great real-life examples on how these dimensions were implemented for successful globalization. In addition, he gives details on how global strategy levers achieve Globalization Benefits and lists effects of Industry Globalization Drivers on the potential use of Global strategy levers. In conclusion, he states major drawbacks of Global Strategy and possible ways for finding the best solutions for choosing the right globalization strategy.
The third article, “Building Value through Global Markets” by Glenn Saldanha,, Patricia Pesanello, and Elizabeth Harrington, basically shows how to build the right strategy in pharmaceutical industry for successful globalization. The authors also consider and analyze three different approaches for building global product value that pharmaceutical companies can assess, which are represented in the article by three global marketing organization models: Multinational Model, Global Model and Regional/Transitional Model. They also define the responsibilities of the global and country managers for each of these models and their influences on organizations.
Additionally, the authors point out major issues to take into account to best achieve global marketing strategies, such as Political and Regulatory problems in various countries, and Customers’ voices, i.e. the needs and perceptions of the customers, which vary significantly across the globe.
I have based my analysis on the ideas, which are consistent with those of authors:
1.The most competitive companies incorporate superior quality and reliability into their cost structures to offer the best value of product at the best combinations of price.
2.We better know everything about the global standardized market, instead of knowing a lot about many customized markets.
3.Different Strategies need different approaches for implementing these strategies. Several strategies can be viable for successful globalization.
4.Global competition is becoming the issue of great importance for most global companies.
However, I have some statements that I consider to be substantial in the analysis of the globalization of markets. First, analyzing the process of globalization and its particularities the authors have to take into account exchange rates in different countries and current economical situation of these countries. G. Yip in brief, mentions in his article the differences in exchange rates, tax rates and transportation and labor costs. I believe it is essential to review each country’s currency exchange policy and economical standing much closer. In Russia, for example the exchange rate today is 27.7 rubles for $US 1.00 (Russian State Bank Exchange Rate as of November 14, 2000). How global company is going to sell its product at the average global price in USD, for example $20 per item, when the salary of the majority of Russian citizens is ranging from $50 to $100 per month and they have to pay all their bills? Russia is not the one country with low wages rate. There are many countries that cannot afford standardized products of global companies. I believe, that this issue should have been taken into consideration by the authors of all of the three articles. Another contradictory point in analysis of the G. Yip’s article to me is that he states that companies tend and should globalize, which will increase global competition and in turn decrease global prices, however, the governmental drivers of the US restrict import of high quality Japanese cars, by setting high emission test requirements and high import taxes. These actions reduce globalization and fair competition as well and I would say substantially discriminate Japanese automakers forcing them to build factories in the US.
Very good ideas and points are delivered through the Framework of Global Strategy Levers which in my opinion is applicable to any company attempting to get into the global market with its standardized products. I also agreed with G. Yip’s table showing the relationship between Globalization Dimensions and Global Strategy Levers. One of the Dimensions is Marketing Participation and under this Dimension author brings an example of Electrolux Group – Swedish appliance giant, which is pursuing a strategy of building significant share in major world markets. I think that Electrolux has a lot of potential on the global market, only because of one fact that it has accommodated to Russian economical situation and has one of the most sophisticated structures in logistics with multiple distribution channels.
Building the strategy for globalization that will be the most appropriate is not an easy task. According to G. Yip’s Dimensions/Global Strategy Levers Model following dimensions will be of the great significance for setting either pure Global Strategy or pure Multidomestic Strategy:
·Location of Value-Added Activities
All of the above combined represent the path to follow for successful globalization, however, some other issues need to be considered, such as benefits and drawbacks of globalization.
Benefits of globalization and/or using global strategy levers differ depending on the company and its products. The critical benefit, I believe, is cost reduction, which is based on product standardization. A marketer can substantially decrease its costs by moving its production to low-cost countries or by pooling production for two or more countries. That is why; nowadays it is easy to find brand name products made in China, Malaysia or in other low-cost country.
Quality concentration also plays a great role when assessing the benefits of globalization. Example given in G. Yip article gives us the perception of the perfect strategy implemented on Toyota Camry by Japanese carmakers.
Certain drawbacks have to be reflected when assessing Globalization. Product standardization for example, can result in a product that does not entire satisfy any customers. That is why many companies when they first enter the global market do not offer standard products adapted for other countries. Also, uniform marketing, can reduce adaptations to local customer behavior (we perfectly know that commercials in various countries are different due to cultural differences, different perceptions and habits). Globalization can incur in substantial management costs and as described in the “Building Value through Global Markets” most pharmaceutical companies would have higher costs because of training expenses, increased number of promotional materials, global conferences and presentations. Also, as we know from the relationship marketing discussion businesses have to get and keep a customer, and in a global business it is not easy because of the huge number of customers in the global market. That is why to retain a customer global producer have to offer better products in better combination of means, places and at the reasonable level of prices.
Our modern world of technology and Internet helps to define better products, better places and better prices from the customer point of view and from the global marketers view point Internet and technology allow them to penetrate the markets where resources are scarce or where their products will be of a great necessity.
•Levitt (1983): “The Globalization of Markets,” Harvard Business Review, (May-June) 92-102.•Yip (1989), “Global Strategy,” Sloan Management Review, Fall, 29-41.•Saldanha et al (1997), “Building Value Through Global Markets,” Pharmaceutical Executive, December, 72-81.
